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Squawk on the Street

News/Business. Melissa Lee, Carl Quintanilla, David Faber. Opening bell market action. New.

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03:00:00

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San Francisco, CA, USA

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mpeg2video

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ac3

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480

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Us 20, Washington 12, Carl 11, U.s. 11, S&p 10, Italy 10, Apple 8, Florida 6, Samsung 5, Rick Santelli 5, Macy 5, Bob Pisani 5, Sandy 5, London 5, Chicago 5, Berlusconi 4, Gordon 4, Hampton Pearson 4, Herbalife 4, Citi 4,
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  CNBC    Squawk on the Street    News/Business. Melissa Lee, Carl Quintanilla,  
   David Faber. Opening bell market action. New.  

    December 24, 2012
    9:00 - 11:59am EST  

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i got you this. this is a mitt romney chia pet. >> wow. mitt romney chia pet. >> and you got you a barack obama chia pet. in a couple of weeks, those things will be in full bloom. >> on ebay you can get one of those. i thought becky was going to be here. i got becky, because she's kind of a jersey girl. i got this for all my guys in the company. the guy who runs my d.c. office, dan clifton. this is fiscal clifton world tour. and all the places where he was, various and sundry places -- >> who is that band? >> this is k.i.s.s. and my partner -- >> we've got to go. jason, thank you for all of this. we appreciate it very much. join us on wednesday. happy holidays. "squawk on the street" starts right now.
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>> can't wait to see what jason got us here. welcome to "squawk on the street" on this final trading day before christmas. i'm carl, with melissa lee, david faber at the nyse. the new york stock exchange and nasdaq closing at 1:00 p.m. eastern time. the futures, a little bit of weakness here which we'll talk about in a minute, after it comes after a pretty bad day on friday. the european markets closed for the christmas eve holidays. london, paris, spain have each completed shortened sessions in light of the christmas holiday as well. the friday sell-off, only five trading days are left in the year. is the market getting used to the idea that a fiscal cliff solution will not happen before year end? >> only a few hours remain to finish your christmas shopping. but some words of caution for toymakers. are tablets and apps ruining the season as kids get more accustomed to technology?
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>> microsoft windows 8 gets more bad press today, as "the new york times" said it is not leading to a boost in pc sales. is there anything that can turn that lagging sector around? futures moving lower, as concerns about the fiscal cliff talks weigh on the market. talks about progress toward a deal sent the down lower by almost 521 points on friday. s&p up almost 14% on the year. it's interesting, this year we've had so many unnatural phenomenon taking place, whether it's the effects of the fed's monetary policy, year end, fiscal cliff tax related issues. the motivations are a little bit different this time around than they were last year. >> yeah. it's not as pressing, some would argue. some were actually saying on friday, maybe it would have been better if the markets had a sharper sell-off because that could have forced the lawmakers to do something as opposed to leave for obama to have a hastily called friday evening press conference saying, you
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know what, congress, you have ten days, you go work it out. it's doable. >> it's been an interesting year. of course, we started off so well, in terms of expectations for economic growth. we had an election this year, too. i think that's another thing that is sort of the key. we hit europe again as we had the last two years previously. but this last quarter, i think there's been a lot more optimism, even with the fiscal cliff sitting there, as sort of this potential, real roadblock at the end of the year. perhaps even too much optimism some would say. when you speak to ceos, there's still a lack of confidence, i would argue on the part of many of them, that you would like to see more of. perhaps a reflection of their concerns about the fiscal crisis that may weigh on our tax spending policies. >> we'll start over the next week or so talking about performers for the year. top s&p performer is pulty, which says how people are
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viewing how people will view what's driving the economy in the coming year. bank of america has doubled. worst performer on the dow, hpq. there will be crystallizations of what happened overall. >> the perspective on this whole thing is the s&p 500 is still up 14% year-to-date. despite the extraordinary circumstances, it's been a gang buster year for the markets. unfortunately, the average u.s. investor out there has largely been on the sidelines. money in bonds, money into money market funds continuing to flow in the month of november. unfortunately, even as we do see a very, very good year for the stock market, not many investors are really taking part in this. >> i think we saw finally an outflow for bond funds in well over a year last week. that has been a rarity. we've warned many of our viewers, be careful of the duration risk. we're going into another year where many people are at least saying, okay, is the rally over?
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the 30-year rally in bonds, is it over? if it is, what is it going to mean? we've had people saying that the last three years. everybody's best trade was to short the long bond. it ended up being one of the worst trades you could make the last couple of years. >> in terms of being careful, speaking of being careful, today will be light volume, shortened session, but light volume. who knows what that could lead to. if you wanted bury bad news, christmas eve is the perfect day to do it. >> it should be a good one to watch, especially in the final hours, to see if anybody comes out with any warnings or bomb shells. it's the day before christmas. we've got to talk about retail. procrastinators in the final shopping day before christmas. jane wells is in california. what's the scene like, jane? >> well, not much of a scene yet, melissa. the mall doesn't open for another hour. macy's, though, is open. you can't enter it from the mall, you have to enter it from
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the outside. i keep walking over to see if anyone's in here. other than employees. and i see two employees. no customers. so i'm not sure it's worth it. a lot of people are writing off this holiday as losing steam. but not piper jaffray, which said over the past week, quote, the holiday may actually home. comscore datas tracking ahead of expectations with a 53% jump in sales last week year over year, and that includes ecommerce. here at the mall, we are seeing sales, sales, sales. what does that mean for profits, profits, profits and margins? for retailers, it may be okay compared to a year ago when they were dealing with higher cotton prices. >> this year we've seen about half that cost retrace, or fall, and so you have an advantage with margins this year that we didn't see last year. we're actually looking for better margins year over year across the board.
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>> it's raining here in l.a. on christmas eve. and you had all the storms last week. could you actually legitimately blame the weather this holiday, if sales don't meet expectations? well, is that good for online merchants? william blair said amazon has increased discounting this year. quote, amazon's consumer proposition appears incrementally stronger versus walmart and target. amazon's prices are 2% lower than walmart brick and mortar prices when you factor in amazon shipping costs and 5% lower than walmart.com. amazon prices are 9% lower than target and 10% than target.com. they think target may be losing its edge on pricing. however, if you're shopping on amazon today, for anything other than a gift card, melissa, i don't think you're going to get it in time for christmas. back to you. >> yeah. really? there are only two employees in
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that macy's? macy's across the country have been continually open for the past day into christmas eve. >> earlier i did see two shoppers. no, that guy's stocking merchandise. no, that's not a customer. we can't go in from this side. >> he doesn't leave the store? >> this woman's dusting back here. i mean, i don't know, they're all working. they're all getting paid. they all get to be here overnight on christmas eve. i assume there's some logic to this. >> i just like, jane, how you are the only would who can unapologetically caffeinate while on air. >> pete's opened early. which is a good thing. because the big jug of coffee i brought from home -- well, crack of dawn, it isn't even dawn yet -- is gone. this is a constant kind of high, crash, high, crash, all day for
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me. >> she looks like she's at the mall, right? what do you do at the mall? you get a cup of coffee. >> walk around, look at the stores, drink your coffee. jane, good to see you. see you later. >> you bet. >> i like how you called jane out. you got your coffee. you have your coffee. >> i know. >> we've got the fire going today. david is warming his hands. >> let's talk about the retailers. the co-founder of cost legends. for the most part i guess you have a good expectation for today? do you expect a lot of sales to be rung up today? >> well, the last four days going into today were the biggest ten days of the shopping season. a lot was riding on going into this weekend. everything looked great heading into the season. we had black friday that was really good. but things have been a bit
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choppy over the past few weeks. it's really been critical that the last few days come through. >> i'm wondering if you think the retailers that are most exposed to the mid-atlantic and the northeast would be most in jeopardy, because in these geographic areas we've seen storms, shootings, and overall nationwide consumer confidence came in at the lowest rating since july. >> there's no question, especially from sandy, at the beginning of november, there was a lot to make up as we got throughout the course of november. but black friday came back nicely. we actually think that it's more going to affect some of the lower income consumers as you look back at the consumer confidence numbers than the higher end special names. we think it will hold it pretty well throughout the season. >> speaking of high end specialty names, you do favor coors and lululemon, those are some of the highest retailers out there. what do you see coors doing right? what sorts of sales numbers do they need to see this season to justify the valuation?
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>> they're at about 27 times. which given the kind of growth rate they've seen, i don't think it's all that expensive. the same-store sales were 25% last quarter. don't see that slowing even though we have modeled in a slowdown from that. not just at their retail stores, where they have a lot of room to open more stores. at the wholesale accounts, the big department stores, they're seeing incredible sales increases. they're putting in these shops that triple the business when they go in there. so continued growth and upside at kors. >> you mentioned it, and we've heard a lot of it, certainly some of it anecdotal, that the malls not as crowded as in years past. we don't know how it's going to end up. what's your sense in terms of online? given how many people alone just bought ipads and tablets, which in some ways seem to incent them to do online shopping? >> for sure. and we know that when people have these mobile devices,
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they're doing that much more surfing on them, too. i felt really good coming out of that black friday weekend. we saw online sales up over 30%. which was a nice acceleration. the numbers that i'm starting to see come out of mastercard spending pulse actually showed a bit of a deceleration, high single digits. the last few days, we know they kept on the free shipping offers up until the last minute. hopefully that will come through and show the mid to high teens we're hoping for. >> laurie, if the last half of holiday shopping season ends up being week, what do inventory levels look like in q-1 and what does that mean for margins when we deal with fiscal q-1 earnings? >> the retailers kept their inventories in excellent shape. that's why the past few weeks they have not had to get overly promotional, which reinforced the consumer saying, they're not giving great sales. so i'm going to continue to hold off. so i don't think that there will
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be a big issue in the first quarter, because i think they have managed them really well. obviously we need momentum as we go up against difficult comparisons as we get into the spring. >> laurie, good to see you. thanks for your time. >> microsoft in the sales spotlight this morning. "the new york times" reporting the tech giant's windows 8 is not getting the sales pop it usually gets from a new operating system. it usually causes a jump in pc sales. the trend is very different this time. historically, rolling out a new os and people are going to buy a new computer. they might as well upgrade the hardware if i'm upgrading the software. the fact that that's not happening is not too much of a surprise, given what we know overall sales are doing. but you would have thought there might be some hallo effect. >> it's not too much of a surprise as the end of last year. microsoft was sataging a great
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turn-around. they had the new data coming out saying u.s. stores sold 13% fewer devices since october which is when windows 8 rolled out. wall street had baked this in. that's a problem now with the stock. >> and the surface tablet has not gotten off to a good start either. >> no. >> they're trying to widen their net of retailers that can distribute that product. so i don't know. it's been a tough season for microsoft. at least from a marketing standpoint, and pr stand point. >> and they're saying people are not buying as many pcs these days. they're waiting, pushing them out. every five years is the typical pc sale, pc purchase by an individual, versus four years before. people are buying tablets in between. >> right. >> that speaks volumes. >> the tablet is a disruptive phenomenon for 2012. on the last shopping day before
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christmas, jcpenney's analyst will tell us why he's upbeat going into the new year. tobias will tell you how to position your portfolio going into 2013. [ male announcer ] at scottrade, we believe the more you know, the better you trade. so we have ongoing webinars and interactive learning, plus, in-branch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more. [ rodger ] at scottrade, seven dollar trades are just the start. our teams have the information you want when you need it. it's another reason more investors are saying... [ all ] i'm with scottrade. it's another reason more investors are saying... boproductivity up, costs down, thtime to market reduced...
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those are good things. upstairs, they will see fantasy. not fantasy... logistics. ups came in, analyzed our supply chain, inventory systems... ups? ups. not fantasy? who would have thought? i did. we did, bob. we did. got it. if you notice unusual trades
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happening today, it might be because of those gentlemen. >> and ladies. >> they'll ring the opening bell. >> we'll tell you more about that in a couple of minutes. in the meantime -- >> they are gentlemen. >> in the meantime, the president is in hawaii on vacation. washington lawmakers are on holiday. there's still no deal to avoid the fiscal cliff. the deadline is a week away. hampton pearson is in washington on the stalemate. >> as early as the day after christmas, congress and the white house will have to start to deal with what president obama called the real consequences of going over that fiscal cliff. >> nobody can get 100% of what they want. and this is not simply a contest between parties in terms of who looks good and who doesn't. there are real world consequences to what we do here.
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>> a short-term deal won't just focus on tax rates. the end of the payroll tax cut and the impact of the hike in the minimum tax on january 1st. over the weekend, we did hear from some republican moderates who say it may in fact be time to make some kind of a move. >> the president's statement is right, no one wants taxes to go up on the middle class. i don't want them to go up on anybody. but i'm not in the majority in the united states senate and he's the president of the united states. >> now the focus shifted to mitch mcconnell. the senate taking the lead on a compromise with democrats, and something that can get some support among house republicans. carl? >> hampton, thank you very much. hampton pearson in washington. >> the gift that keeps on giving. we're talking about market wisdom. what you need to know ahead of the opening bell.
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and whether you're a holiday traveler or investor, you want to hear about the state of the airline industry. let's take a look at futures one last time before the holiday shortened session. about ten points down on the dow. ally bank. why they have a raise your rate cd. tonight our guest, thomas sargent. nobel laureate in economics, and one of the most cited economists in the world.
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professor sargent, can you tell me what cd rates will be in two years? no. if he can't, no one can. that's why ally has a raise your rate cd. ally bank. your money needs an ally. to the best vacation sp(all) the gulf! it doesn't matter which of our great states folks visit. mississippi, alabama, louisiana or florida, they're gonna love it. shaul, your alabama hospitality is incredible. thanks, karen. love your mississippi outdoors. i vote for your florida beaches, dawn. bill, this louisiana seafood is delicious. we're having such a great year on the gulf, we've decided to put aside our rivalry. now is the perfect time to visit anyone of our states. the beaches and waters couldn't be more beautiful. take a boat ride, go fishing or just lay in the sun. we've got coastline to explore and wildlife to photograph.
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and there's world class dining with our world famous seafood. so for a great vacation this year, come to the gulf. its all fabulous but i give florida the edge. right after mississippi. you mean alabama. say louisiana or there's no dessert. this invitation is brought to you by bp and all of us who call the gulf home. about eight minutes to the bell on this monday morning.
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let's bring in post 9. the partying has already begun. >> we were doing a little heavy christmas caroling, i think. >> happy holidays. >> thank you. merry christmas. >> we'll talk about business in a minute. but the great decisions of the exchange. nellie's in great times. >> it's almost the national anthem of the new york stock exchange. and it goes back to -- i mean, they've had parties on the floor going back 1873. some of them were rather raucous. but after 1929, up until then they had bands and a variety of other things. then it seemed that wasn't either good pr or a little too expensive. so the members continued singing. and in the depth of the depression, a song that really struck is, wait until the sun shines, nellie. it's continued ever since. and this morning shortly after 11:00, we'll convene over where they trade ge and try to give it a shot. >> that will be certainly a nice
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respite from today's trading session. it looks like it could be a volatile one, given the lack of progress on the fiscal cliff. how do you think today goes down? >> christmas eve has a mild upward bias to it. people tend to be upbeat. the concern among many traders is the failure of plan b may in fact have doomed us to going over the cliff, because from a negotiating standpoint, would the president want to give on anything and lose some of his base if he feels that boehner can't even deliver his own package. so they greet it a little more negatively than the full market. >> on the side of senator john bar oso said over the weekend, said the president senses victory at the bottom of that cliff. in other words, if they can't deliver on the cliff, most people blame republicans anyway. so politically there is some argument to be made for going over. >> well, yes, it would seem to
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favor the white house. so that might be tempting. on the one side, as i say, no sense giving in if you think the man you're negotiating with can't deliver anything. it could get to be very difficult. again, we're watching for little signs like, will the treasury ask companies to change the withholding. if not, then they're assuming that the trip over the cliff is going to be very, very brief. so we'll see how -- >> if they don't, though, that suggests it might be a longer run over this cliff. >> oh, if they do come in and say we'd like you to take another look at your withholding, then that would mean they may be looking at weeks and months. >> in which case, do you think a recession is a given? >> i would think -- nothing's 100% in this life, but i would make it a good 95%. >> so that would be the first half of next year would be tough. >> it could be a real problem. >> let's say congress gets back on the 27th and they're able to hammer out a mini deal, where they prevent tax rates from going up on most americans.
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does that warrant a market rally, even though a lot of the details are left to be done and dealt with in 2013? what's the market reaction to a slimmed-down deal? >> i think you would get a rally, because you would escape that near servitude of a recession. that would give you enough wiggle room in there to look around. i don't know how celebratory it would be, but i think it would be a sigh of relief rally. >> art, happy holidays. we'll see you around 11:00. >> okay. thank you. >> rest those vocal cords. if you invest in travel web stocks, you are flying high. should you expect more of the same in 2013 or should you take profits now? and retailers open for business on the final shopping day before christmas, but how will they open for trading on wall street? the winners and losers right after the break, after the bell rings here on the big board. [ male announcer ] you are a business pro.
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i'll tell you, it might be the middle of winter, but it's more like the cast of "some like it hot" here at the exchange. it's in french. i'll let you say the actual name of this group. a group of ballet enthusiasts founded in 1974, professional male dancers. everything from ballet to modern dance, classical, original works. it's definitely adding an air of levity to the occasion. in a couple seconds, the opening bell at the nyse. as we said, at the big board, the ballet from monte carlo. performing until january 6th in new york city. and over at the nasdaq, a group that does a lot of good work at this time of the year, the salvation army. >> some like it hot.
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>> interesting. >> the birth cage. bird cage. >> looking where we are opening, no surprise to the down side here. initially out of the gate, one of their biggest losers is microsoft, down by more than a percent. we were talking about whether or not there will be any upside to pc sales. a lot of the data points indicated by "the new york times" saying no. saying pc sales are lower than expected. you've got microsoft down by about 1%. one of the leaders for the year, you mentioned bank of america, the best performing stock on the dow. a double this year if you're lucky enough to get in on bank of america and stick with that trade. across the board financials seeing a little bit of weakness in today's session. >> keep an eye on facebook. obviously the news a little thin this morning. the sunday "times" of london
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reporting the company has various methods of tax avoidance to shield 400 million pounds from british taxes. and a threatened boycott in london, and they promised to change some of their practices. not many times we see facebook mentioned alongside. >> herbalife is higher today, after losing about, what is it, 30-something percent -- 36%. short position on the company. we should note that reilly discontinued coverage of the stock today. it had rated herbalife a buy. and on friday, checking out the website herbalife.com. look at that, it's up almost 50%. >> carving out new territory for
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activists, investors. we've seen websites in the past, presentations in the past. but perhaps we haven't seen it all put together with a spokesman such as mr. ackman, who is extremely eloquent, and can be quite insightful as well. you wonder whether it's not sort of yet a new pathway for activists, investors to really come after companies, certainly here on the short side. of course, he said all his profits from the short sale will go to charity. it's an interesting dynamic. one wonders, given his history as well, with these public pronouncements from way back, he doesn't seem reluctant to go at it, even though he's been criticized in the past. this is many years ago, close to sort of crossing a line, that some regulators, at least -- >> talking on the street. he did it with -- >> particularly on the negative side. particularly on the negative side, short side.
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but it's not illegal. >> the journal this morning, we had david from discovery on in the past week or so. the company's potential to raise ad rates is pretty good while keeping margins high. it's worth the premium that it commands, and that fits into the entire story that we went over with him when he was on the other day. >> international such an important part of their strategy. many of the other companies talked about it. some actually have exposure to it. discovery certainly does in a significant way. there is a larger issue in cable, which is ratings overall, which are not going up any longer. after a 20-year move wherein they took so much share from the broadcast networks. that's interesting for 2013 to keep an eye on. can the networks continue to maintain significant increases in ad revenues in the face of no longer significant increases in their ratings. >> look at young brands, up
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1.5%. the chinese government has cleared chicken samples from various kfc restaurants. some concerns last week because some of the chicken that they procured from various farms were found to have high levels of antibiotics. 32 samples passed for antibiotics and steroids. some major issues for yum brands, 44% of its revenues come from china. getting the clearance at this point, very good news, and we're seeing the stock respond accordingly. bob pisani is here on the floor with more. >> good morning. merry christmas, everybody. over the weekend, is there a plan c on the fiscal cliff floating around. the only offer that's really on the table, and i hate to get so simplist simplistic, was the president's offer. he mentioned it at the press conference late friday afternoon, and that's raise taxes on the top 2%. that's basically the offer on the table. there's a lot of people trying to throw in a lot of spending cuts into a so-called plan c,
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raise the medicare eligibility age from 65 to 67. that's really an afterthought going in right now. the president's offer is the one on the table right now. at this point the choices are getting very, very narrow. i didn't hear do nothing. i didn't hear about a grand bargain. the other big thing over the weekend, i was getting a lot of e-mail about, is when will the treasury department declare they've run out of the capability to borrow money. certainly by the end of february, everybody knows that. but some people think it could happen sooner than that. that will bring up the whole issues about the rating agencies coming out with warnings of a downgrade. january could be very dominated by that, if we don't come to some resolution on the spending side here. you guys mentioned retail sales. i'll tell you something, there was very good reason, at least i was hopeful to expect retail sales would have done very well in the christmas season.
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number one, home prices are up nearly 10%. that is a dominant factor when it comes to consumer sentiment. i was hopeful we would have a good christmas season just based on that alone. in addition, gasoline prices are way down compared to where they were last year. and finally, i know nobody watches the stock market anymore, but the s&p is up 14% compared to last year. put the three factors together, that would have argued for a fairly decent retail season, yet we're not hearing it. i went shopping over the weekend in philadelphia, the main shopping street, i saw sales everywhere. i saw sales in ann taylor, sales in guess, sales in most of the stores that i walked in. and most people feel it's a fairly muted christmas, whether it's hurricane sandy, the fiscal cliff, newtown, connecticut, what happened up there, that's the gem feeling overall. jcpenney, they've had promotions walking away from it every day, low discount price story. oppenheimer noted discount racks had been cleared and the traffic
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seems to have improved in that store. maybe that change in their philosophy has helped them out. that's a note that was out on oppenheimer today. bottom line here, guys, is i think we are seeing some movement with some companies to deal with some of these retail sales issues. you'll see a lot of pressure on margins. david, i think you mentioned this, about what was going on with inflows and outflows from equity mutual funds. it's true we're continuing to get outflows from equity mutual funds. that's certainly been disappointing. we had it going through up until last week. the end of last week, it was reported the first outflows from treasuries. more specifically, from general bond funds. that's the first time we've seen this in a very, very long time. all right, it was a very small number, something on the order of $1 billion or something like that. and there's $3.8 trillion in bond mutual funds. so we're just talking about a tiny number. but this is the first time it's happened in a long, long time. i don't know if it's the start of a trend or not, but we've
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been waiting for something like this to happen. remember, this is a rubber band that can snap very easily. guys, back to you. >> bob, thanks a lot. bob pisani. see you a little bit later. you mentioned the oppenheimer, and they'll be on the floor later. rick santelli at the cme group in chicago. >> good morning, rick. >> good morning. happy christmas eve, carl. if we look at interest rates today on an interday chart, it doesn't look all that exciting. but you never know, i've seen wild activity on christmas eves, i remember 20-something years ago, the dollar/yen had an up and down when they had futures of 125 points. so you never know. if you look at the year-to-date chart of the ten-year note yields, we gave it a good go last week and the week before, for a run at unchanged on the year. which would have been around 187. but we never made it. the only maturity that has crossed and is higher yield on
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the year, the 30-year bond. some day, remember, look at the clinton years, almost an 8%. that's when you could talk about clinton era tax rates. but boy, look at those clinton era savings rates that the savers were getting. if you look at dollar/yen, it's having another great day, on its way to 85. 20-month high. if you read all the comments and stories this weekend about abe in japan, and today he's in the "wall street journal," he wants it to go to 90. he thinks there's definitely a war going on in the foreign exchange markets. he's probably right. let's look at the euro currency. hovering at an eight-month high. there's probably going to be excitement there. one thing i can tell you is the boon in the euro, big trade in the last couple of weeks. melissa lee, back to you. >> they certainly have. rick santelli, thank you.
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the fiscal cliff talks also weighing on the energy markets. let's go to bertha coombs at the nymex. >> we are seeing a little bit of a pullback here when it comes to brent futures, and also across the board pretty much in energy today. not what you would necessarily expect with the weaker dollar. the concern, of course, is that if we do go over that fiscal cliff, no deal by the end of the year. that we will see some recessionary pressures here in the first quarter. at least that's what the congressional budget office is talking about. nat gas is feeling the pressure after a strong rally over the last couple of days. we're getting profit taking there. ironically, it comes after the commitment of traders report from the cftc saying we saw the biggest increase in terms of net long positions in nymex futures. gold holding steady. not necessarily being the big safe haven play. but it is among the strongest performers in the metals
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complex. we are seeing some strength in po laid yum and platinum. that according to rbc because of a new etf there. >> thank you very much, bertha coombs. we've got a travel doubleheader for you. former continental airline expert gordon bethune. and riding the rally in travel website stocks. which names are likely to keep heading skyward. take a look at the early movers in the holiday shortened session on wall street. a shot of th
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this morning, as winter storms delay flights for those heading home for the holidays, how are the airlines going to be impacted. gordon bethune joins us this morning. gordon, good morning. merry christmas, and happy holidays. >> happy holidays to you. >> i was just thinking, the weather in the northeast has
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been pretty good. if you're an airline executive today, are you going into this final week with a dose of greed over the profits or fear over the weather? >> well, you've got everything scheduled that you have. so there's no -- this is a peak travel day, like the monday after thanksgiving. so there's no spare airplanes sitting around, you put everything on it. you really don't have any reserves. let's hope things turn out well. >> yeah. there has not been -- i mean, there's no nightmare front, at least that we can see in the northeast, and given the amount of business that gets done in this part of the country, that's good news, isn't it? >> absolutely. it's a home run. because nothing worse than having a really bad travel day on a day like today, or the monday after thanksgiving. those are the two biggest travel days of the year. >> gordon, i feel as though we haven't paid enough attention to the prospect that amr and u.s. air are going to get together. do you think it's going to
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happen, based on the latest offer, and what will it mean if it does occur in 2013? >> well, the ratios i think will get figured out. i hope they will. my bet is that it does happen. and this puts just more stability into the picture. you don't have -- you've got the proper capacity match to the demand. you don't have people pricing for cash, or unnecessary capacity in markets that can't sustain it just because of competitive reasons. so i think three big competitors are plenty to keep prices in line. but it also gives some employment stability and profitability, sustainability for investors. >> are you surprised how the airline industry has been so disciplined over the past couple of years in terms of capacity, and therefore, seems to be generating, dare i say it, real cash flow? >> i think it's called creditors' committees that put discipline in them. it's not voluntary.
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it's driven by investors that have put the right people in that use sound judgment. i'm kind of for it. it's really good for the employees to have a plan that works and a place -- and it's good for suppliers to get paid. so i think it's good for our country to have a stable, but sound, robust transportation system. >> gordon, gas prices in this country, i think every state's got an average below $4, the lowest in a year. is that translating to jet a and what's that going to do to the profits in the first quarter? >> in the first quarter, it's a tough quarter to make a nickel. there have been, in my lifetime at least, first quarters that were profitable. with the right fuel pricing, because you price 90 days or so out, it could mean the big difference between a negative first quarter and a first quarter with positive numbers. >> we know what a tough quarter
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the first quarter is. what's your sense, is this long lasting or not? >> you know, i'm old enough not to guess on that one. but let's hope so. there's really smart people at the helm of the big boys today. so i think they've all learned their lesson, i hope so. and they've been burned enough to know not to go out and expand just because of the testosterone and being the biggest guy on the block. >> there have been continuing problems with owens dreamliner. as the former ceo of an airline company, what would your stance be on taking up this new plane? >> melissa, i'm partial because i worked for boeing for so long. it's going to be a great airline. it's having competing problems, just like a lot of new technical problems, like new products do have. it's going to long term be a really good airplane. passengers will prefer it. and the maintenance operating
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costs will have substantial savings to it with today's technology. they'll weather that storm. i'm looking forward to flying one myself. >> gordon, thanks so much for joining us. happy holidays. >> happy holidays to you guys. >> gordon bethune, former chairman and ceo of continental. now to the impact on online travel stocks. jay fuller, always good to see you. >> thanks for having me. >> given thanksgiving and christmas, how is the fourth quarter? >> the big quarter for the online travel companies is 3-q. december is a little less than a third of the full fourth quarter. so it's not a make or break issue for the online travel companies. >> with all of the issues that we've seen over the past few weeks, whether it be superstorm sandy or worries about the fiscal cliff, how has business been tracking for these guys? >> generally we're seeing very strong business trends, looking at expedia, for example. a top line growth of 15% to 20%.
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sandy certainly had an impact. we're talking about 5 to $10 million. in the case of priceline, we're looking for 25% to 30% growth. very strong. we're seeing issues more on the hotel side of the coverage, say marriott or starwood. we're seeing relatively cautious tone in terms of corporate travel demand. >> how does -- let's say the likes of a marriott or starwood, let's say they discount their rooms. how does that impact the margins over a priceline or expedia? do they impact them at all so only the hotel stocks feel that? >> it does impact them. they take the rate and get paid a percentage off the top. expedia, priceline, isn't setting the rate. ultimately it would be a good thing if you have demand stepping up because you see discounting in the channel. oftentimes the leader traveler is going to benefit if there's weak corporate demand because the big chains will discount to
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fill in the rooms with the leisure traveler. >> jay, we talk about the fiscal cliff impact and nobody knows how that story's going to turn out. if taxes do elevate in the new year and stay elevated compared to this year, i mean, isn't travel largely discretionary, largely a purchase that you make with some extra income you have on the sidelines? what might we be looking at in terms of travel demand, not this quarter, but in the next couple of quarters? >> certainly i think from a big picture standpoint, you're more worried about this as it relates to marriott or starwood in corporate travel demand. that's where we're seeing the concern. leisure travel remains relatively strong. you still have the secular tailwind here. only about a third of travel globally sells online. and that penetration is going to rise. so maybe you get to negative impact, but i think it's offset by the secular tailwind as business moves online, and increased caution or concern likely accelerates that shift to online. >> are there any hotel chains that you do like? i'm curious, because i understand that the business
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travel segment might feel the most from the impact of the fiscal cliff. at the same time, if leisure travel is holding up, they've got to be staying somewhere when they fly to wherever they're flying to. >> sure. so across my coverage universe, which includes online travel and hotels, expedia is going to be our top pick. as it relates just to the hotels, the only one we're recommending is windham, which is a little bit of a hotel stock. they have lower hotel brands. they're a franchise. but more importantly, they're also heavily weight to the time share business which historically hasn't exhibited as much cyclity. >> nice to see you this morning. >> thank you. >> jake fuller from lazard. after running neck and neck with the s&p this year, what can investors expect from the tech sector in 2013? also ahead, could the iphone or ipad you're buying online could be a stolen gadget? what you need to know about the underground market for apple products. as we head to break, listening to the music of mr. grinch.
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financial times reporting this morning that toymakers are trembling as tots turn to tablets this holiday season. kids don't want toys? what a horror. that brings us to this morning's heart-felt squawk, toys for tablets this holiday season, what's up with these kids these days. we've got your responses throughout the morning. i like how they make the person with no kids read that. >> there's an element of truth to it. i don't know what your experience has been. we try to limit their exposure to tablets in general. if you let kids have the run of the place, they would be on them a lot more. >> that's true. my kids are a bit older than yours. my 10-year-old is certainly done with toys. underarmor garments of any kind, and electronics. but girls still like dolls, to a certain age. >> we're all princessed out. i'm going to come in today with rapunzel hair. >> i would like to see that.
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and the ballet truckadero. what a show. >> unlike washington lawmakers, we are not on holiday when it comes to the fiscal cliff. we're talk with former pennsylvania governor ed rendell. tobias levkovich, what's his game plan for investing in the new year.
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we are a half hour into trading on the shortened trading day. the new york stock exchange closing at 1:00 eastern time. stocks under a bit of pressure. tobias levkovich will talk about next year. why he's so bullish for 2013. >> the power of promotions. jcpenney may be having a merry christmas. we've got the analyst who said he's seeing positive signs from penney's and sending shares higher in today's session. >> the underground market for
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apple products are getting hotter. despite worries about the fiscal cliff, citigroup upside for 2013. tobias levkovich joins us now from post 9. tobias, happy holidays to you. >> happy holidays to you guys as well. >> s&p 500 target 1650 for 2013. i would imagine that it was easier to say a deal's going to get done and not really impact 2013 two weeks ago, or a month ago. we're here at the end of the year. are you still confident in this target? >> unless washington really flubs it, and what i mean is, not being able to do what we call a bungee jump post-january 1st, in other words, go off the cliff, create the -- if you want to call it the crisis to form the consensus and couldalescencf the forces, then we have a debt ceiling lift, that's a huge risk to the markets next year. if all we're really doing is
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going past december 31st and have to do something in the first couple of weeks in january, i don't think it rips apart what's going to go on in next year. >> i don't want to be the grinch on christmas eve, but why are we holding off with optimism when two months ago you would not think we would be sitting here with no deal at all with five days left of the year? >> back in october, we thought the potential we were going over the cliff was clearly there. in fact, we talked to legislators back in april and we heard from a number of them saying, maybe the best thing you can do is create that crisis that i just mentioned before to force the outcomes. and therefore, we weren't as confident maybe as others that the world was all going to come together beautifully. they're clearly ideological differences, in what seems to be a $200 million differential between the two most recent proposals. both see some, and sadly, both
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see some winning political points by going over the cliff, both sides. so it's been in transition on both sides as opposed to picking on just one group. >> let's push the cliff aside for a moment and assume it gets resolved early next year. counter for me maybe the argument that says on the negative side, housing fine, auto sales, good. but margins are at an all-time high. profit growth next year is going to be disappointing. >> i'm going to try to address them all. let's start with profit growth. we're forecasting just under 5% earnings growth. when we survey our clients back in october, they were looking for 3% earnings growth. even though the consensus bottom up estimates from the analysts are showing double digit growth. that's already in their expectations. number two, in terms of growth,
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one of the things we watch most carefully is credit conditions from the senior loan officers survey for commercial industrial loans. what are businesses saying about their ability and senior loan officers saying their willingness to extend credit. what it tends to do is lead business activity by nine months. last october, october 11, it really plunged, told us that this summer was going to be more challenged. since then things have been getting progressively better. we've seen some some job growth, some pickup in industrial production, the kind of things you would expect to see. >> we're up 14% on the s&p. you're talking about 5% earnings growth, granted not what the sell side expects. that doesn't sound like such a great scenario. >> it isn't. it's modestly getting better. we think what will have to happen is multiple expansion to get to the 1615 target. you're going to need multiple expansion. we thought the same thing going into this year. you're just about at the target of 1425 right this minute.
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i'm okay if we shut the market down for the rest of the year. i kind of enjoy it. but the context of how do you get multiples, you need some activity in washington to address the bigger issues, the fiscal reform issues, not just getting past the cliff. you need to look at the expenditures. we could tax a lot and still never get close to what health care is going to do to the long term fiscal imbalances in the country. >> the company that runs this room agreed to sell itself last week. one of the arguments the buyer made is there is tremendous upside for equity investing around the world, and in this country. is that true? and if it is, is it a 2013 phenomenon? >> we wrote a piece a year ago, december 11th, 2011, called the raging bull thesis. the argument we were moving from a trading environment, which they had been talking about for ten years, and moving towards a new secular bull market beginning in 2013.
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that means you take out the old highs. we still believe that, 1615 who take out the old highs. housing getting better, turning after six years after a horrible recession. we're looking at the energy boom in the country. we're looking at the wireless mobility aspects to technology and we're looking at the -- one other phenomenon is the competitiveness. >> does that bring mom and pop home? >> what will bring mom and pop home ultimately is losing a little bit of money in their bond funds. over $1 trillion in bond funds over the last four years. but if you look at survey work, particularly survey of consumer finance by the federal reserve board, you'll see that people still want to buy equities. that's been true for the survey for the last, you know, 10, 12 years, despite what just happened. most people don't understand this, 35 to 39-year-olds is a cohort of the americans who
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begin to save for retirement. essentially they get married in their mid-20s, have a couple of kids, and buy the house and then go off to save for retirement and children's education. that group peaked in 2000 in terms of americans, fell since then, turns in 2013, starts to grow and it will be bigger than the baby boom is over the next decade. >> the good times are coming, tobias? >> we think so. >> the baby boomers taking their money out. >> consumer finance, happy you brought that up, almost like you logged it in for me. survey financials shows people post-65 take their equities down. the good news is the baby boom average age is 55. so we've got ten years to worry about that. >> we do our work. >> tobias, good to see you. happy holidays. >> happy holidays to you. your little hockey player? >> the day before christmas, of course, still no fiscal cliff resolution. the $500 billion in spending cuts and tax increases start on
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january 1st unless the white house and congress reach some sort of agreement. we're joined by former pennsylvania governor ed rendell, co-chair of the campaign to fix the debt. and a cnbc contributor. governor, happy holidays. good morning to you. >> good morning, guys. >> so we're sitting here wondering what can be done in the next seven days. even in your role, if you're having to reset expectations. >> sure. i think it's fair to say the campaign is disappointed. we're not going to -- unless lightning strikes, we're not going to get a big deal. we're going to get something that avoid the cliff. kicks the can down the road on the serious issues. the serious issues, the can gets kicked into the debt ceiling. president says he's not going to deal with the debt ceiling. who knows what's going to happen at that point. i think we blew an opportunity in the last seven weeks to really sit down, do something good for the country, do something good for the economy, of our country and maybe the world, by doing a big,
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significant deal that dealt with entitlements, dealt with the fiscal reform, dealt with tax reform, dealt with health care, dealt with energy, dealt with infrastructure. all of the challenges that we're facing. we missed that opportunity. >> it's odd to listen to you talk in the past tense. does that mean you've given up hope on the next week? >> no, i think there could be a deal that will avoid the fiscal cliff. but it will be a short-term deal, not a big deal. it will kick the can down the road on the important issues. like let's assume the president got the entire increase on the top 2%. that's only $400 billion. where is the next $800 billion going to come from? nobody's decided. those are tough issues. is it going to be meaningful entitlement reform? meaningful reform of the health care cost curve? are we going to do something about military spending? robert gates says we can take $80 billion a year out of the military budget. we're not going to do that.
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but are we going to do something meaningful? those are the issues. all we seem to have done, even if we pull it out in the last week, we kick the can down the road on the very important long-term issues. >> so if this is really a blown opportunity, to borrow your phrase, how does the campaign to fix the debt's mission change? or does it stay constant as we kick this and move it into the new year? >> we're constant. we're back there banging on everybody january 2nd. to do this up against the debt ceiling is embarrassing. it's embarrassing for us as a country. it's embarrassing, it should be embarrassing for us in front of the whole world. let's do it because it's the right thing to do. we know we've got to do it. and because as the rolling stones say and the president said a couple of days ago, you can't always get what you want. but if you try hard, you'll get what you need. >> wow. jagger, you, they're almost the same.
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governor. >> and president obama. >> do you blame the president at all -- it's said he holds all the cards. he's told the gop, you blew that deal. i'm not going to give that to you now. i mean, political points are one thing, but is there any room for, i don't know, do you call it chivalry, in light of boehner's difficulties? >> in the truth and justice, it's almost impossible to negotiate when there's no one across the table who has the authority to negotiate with you. give the president that out. i do think the president has to understand the position of the other guy. i think he's done that to some degree. he's reduced his revenue requests. he's broadly indicated that he would take some entitlement cuts. so i think there is a framework for the deal. but if we just avoid the cliff, or we don't avoid the cliff, on january 2nd, the president's got to get even more involved in this, lead, drive a settlement home. he's got the american people on
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his side. this is the time to do it. we can't do it small. we have to do it big. if we're going to have the economic boom that all of us in the campaign think will happen if we fix the debt, it can't be done small, it has to be done on a large scale. >> here's to that happening in 2013, governor. and to a revamped offensive line for our eagles. >> absolutely. happy holidays to everyone in squawk. >> thanks a lot, governor. see you later. >> another rough morning for shares of herbalife. kayla? >> melissa, herbalife shares have dropped, but up premarket by 4%. now they're plummeting past the key level. we had a put that expired on december 21st. traders saying there's a little more options activity with puts and potential shorts for those shares escalating in early trading today. guys, back to you.
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>> yeah. kayla, thanks so much. shares of jcp down 40% over the last year. but one analyst putting out a positive note on the retailer this morning. he'll explain why he sees some evidence of success at the department store. plus, crude oil prices pulling back this year. how can you get the investing edge on energy in 2013. we'll get predictions when "squawk on the street" comes right back. ally bank. why they have a raise your rate cd. tonight our guest, thomas sargent. nobel laureate in economics, and one of the most cited economists in the world. professor sargent, can you tell me what cd rates will be in two years? no. if he can't, no one can. that's why ally has a raise your rate cd. ally bank. your money needs an ally.
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it's been a tough year for jcpenney. but oppenheimer said it's up on sales. you say in your note you visited two jcp locations this past weekend. is the entire note based on the visit to two stores? >> well, the easy answer is yes. my team and i have been talking a lot lately about jcpenney with a more price promotional strategy. we've been going to the stores over the past couple of weeks. this was kind of a follow-on to what we've been seeing lately. the key message we're making is, it's very clear to us that jcpenney is now assuming -- or reassuming a more price promotional strategy. we think while this is a deviation from the initial strategy, it's helping to drive better traffic to these stores. i think in this position the
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company is better if they accelerate their plans in 2013. >> you spent the weekend visiting stores in new york and new jersey. are they new stores or old stores? >> the stores we visited the past weekend are the revamped stories. >> yes? >> yes, they are. the stores we visited this weekend are the revamped stores. >> that's a small percentage of the overall store base, crest? so to extrapolate this across jcpenney, it seems on the surface a big assumption. >> that's absolutely true. i was talking to our oppenheimer sales force this morning, talking to clients, that goes without saying. whenever we do store checks, i put the caveat in there, i'm only looking at a couple stores. you basically make the assumption other stores are doing something similar. that could be different. that's essentially how we do the
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channel checks in retail. >> brian, to the larger question of whether the success that jcpenney is having in stores like the ones you visited can be replicated and whether they have enough capital to get them there, where do you come down on that? many of the people i speak to say it seems to be working, but frankly, they're just going to run out of money in terms of actually being able to do a significant amount of the store base to get it to that format. >> my team and i have done a lot of work, i call it the cash cycle for jcpenney over the next several quarters. our basic view is it's going to be close, but they will have the capital needed to effect the turn-around. to put numbers to it, we think the company is going to end somewhere around $850 million in cash this year. as you push into 2013, they'll roughly spend $850 million in capital to remodel their stores. you have a cash cycle through the year that takes into consideration, they've got to build inventories for the
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holiday. net-net, they should end the year in 2013 with about $500 million in cash on the balance sheet. >> last big question, brian, jcpenney is doing better. who are they taking share away from at this point? >> i want to be careful. everything's relative. what i'm seeing in the stores right now is some traffic returning. comp store sales, jcpenney has been running down 20, 25%. so i think it's too early to say right now who they're taking shares back from. again, if this works, and this is what my stance in the stock has been for a while, i'm a big believer ultimately this turn-around is going to work. if that happens, this is over the next two years or so, i think a lot of retailers will be donating shares back to jcpenney. that could be companies like target, walmart, kohl's, and the list goes on and on. i think ultimately jcpenney will have a better look in their stores and take the market share back. >> brian, great to speak with
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you. happy holidays to you. >> same to you. >> the term apple fakes a whole new definition. ipads stolen only to be resold. a look at the underground market for apple gadgets. coming off a bad week of weather in much of the country, the impact mother nature is having on retailers during the holiday shopping home stretch. when you have diabetes... your doctor will say get smart about your weight. that's why there's glucerna hunger smart shakes. they have carb steady, with carbs that digest slowly to help minimize blood sugar spikes. [ male announcer ] glucerna hunger smart. a smart way to help manage hunger and diabetes. you can stay in and share something... or you can get out there and actually share something. ♪ the lexus december to remember sales event is on. this is the pursuit of perfection.
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buyer beware. apple devices are a steal, literally. there are a lot of snatch-and-grab robberies where they're being resold on the web just in time for christmas. a closer look at the underground market for apple products. >> if you're exchanging gifts this holiday season, it's likely you've either bought or may receive an apple product in your stocking. but it's not just new apple gadgets that are being gifted this year. lightly used products are also popular and discounted. so what kind of used apple products end up on sites like ebay and craigslist and amazon? some are sold by the fanatics
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who simply upgrade every time a new device comes out. but many of them are also stolen. one san francisco security firm estimates that the market this year for stolen cell phones is more than $30 billion. the fcc says that 30% to 40% of robberies in some of the biggest cities involve cell phones. in washington, d.c., they say it's 38%. in san francisco, police say it's nearly 50%. it's difficult to break out the numbers and break it down by brands, but police have confirmed that the best of apple products is a big business. they call it apple pigging. in new york city in september, the nypd reported theft of apple products was up 40% year over year, and they expect that number to rise over the holiday season. how can shoppers figure out if the devices they're buying are legitimate or stolen? apple phones have serial numbers. those can be traced, of course, if a phone was reported lost or stolen. they'll also be blocked from further use. experts actually say if you're buying used online you should
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ask for the serial number of the product. david? >> thanks very much, jackie. between hurricane sandy in october and the snowstorms out west over the last few days, people could have had a tough time getting out shopping over the last couple of months. how are retailers faring? well, let's check in with ken perkins. he joins us now to break down how the holiday shopping season has been stacking up. and ken, we know we started off pretty well on thanksgiving. but things slowed rather dramatically, didn't they. >> they sure did. you have to categorize the sales up to this point as being particularly disappointing. the lull that we've seen post-thanksgiving all the way through up until last saturday has been particularly pronounced this year. we're seeing estimates come down, same-store sales in december have come down several, about 30 basis points and estimates lower this morning, a little bit more. shopper track lower, their estimates for the holiday
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shopping season has been significant. >> i mentioned hurricane sandy. but the fact is warm weather can have as much or more of an effect on whether people go and buy things, can't it is this. >> it sure can, david. you know, mother nature has been particularly cruel to the retailers the last couple holiday seasons. we had abnormally warm weather last year throughout the holiday season. temperatures were balmy. this year in the rockies and midwest, even northeast, temperatures are running 5% to 10% above average norms. it's really impacting outerwear sales negatively. we've seen a lot of sweaters 50% off, a lot of coats and related items 50% to 70% off as retailers have been unable to sell them. buy now, wear now has been particularly hard hit this holiday season. >> should we be worried about geography, ken? location, location, location applies to retail just as much as it does real estate, i would imagine. the quarter of the nation's retail sales are made up by mid-atlantic as well as the northeast. this is the area that's been hit
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by a storm and also had -- it seems like unseasonably warm weather in that we haven't had any snowstorms to make people go out and buy boots and cold weather gear. >> yeah, that's a great point, melissa. the northeast is such a crucial -- and mid-atlantic is a crucial segment of the retail business for these guys. we saw with hurricane sandy, you know, what a dramatic impact it had on november sales. they were particularly soft across the board. i think a large part of it was attributable to that. there's no doubt there will be carryover into december here. and throw on top of it the warm temps, it puts pressure on them. i guess the one thing that might really help these retailers out is we've been seeing a channel shift to online. we've been seeing those numbers grow. so when we finally get the final numbers, maybe that will help save the holiday season. >> so where do we go from here? this last weekend was not bad, though, correct? things did start to pick up a
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bit? >> it did pick up. we were in stores friday night, store checks, it was moderately busy. saturday there was a crush of traffic. it was very busy. we would point out promotions looked to be in check. there were only a few retailers out with 60% to 70% off. sunday looked to have slowed. if you ask me, it doesn't look like it really pulled it out this weekend, with, you know, robust, really strong growth across the whole weekend. it still looks like it's going to be a little bit soft. unless there's a large increase in gift card redemptions over the next week following christmas. the day after christmas is one of the top five shopping days of the season. as are a couple days that follow. >> all right. ken, we'll be keeping an eye on it and see how it all played out. ken perkins, with retail metrics. >> the toymakers are trembling. as kids turn to tablets this holiday season. turns out some children don't want toys, they want tablets instead. bricks us to this morning's squawk on the street.
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we wonder, ha is up with kids these days? tweet us at squawk street and we'll get some of your responses later on this morning. >> as washington lawmakers continue efforts to solve the fiscal cliff, what's at stake for muni bonds. the bling's the thing. $14 million worth. a look inside the ultra-exclusive tiffany salon straight ahead.
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about an hour into trading here. some of the stories we're squawking about here. shortened day of trading today. the stock market will close at 1:00 p.m. eastern. gold will close at 12:30. facebook is accused of dodging taxes in the uk. the london "times" said they tried to hide taxes. a tablet for under $100, the journal said acer selling a $99 tablet next year. similar to the amazon kindle fire and barnes & noble nook
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color. >> by now, we all should certainly know about the fiscal cliff, shouldn't we. but there's another so-called cliff that's getting people's attention. brian shactman has more. >> some calling it the container cliff. negotiations broke down late last week. that could be bad news from massachusetts to texas. if there's no deal, several thousand dock workers could walk off the job at 15 ports at 12:01 a.m. on december 30th. this includes the port of new york and new jersey, which is the largest on the east coast, handling more than $200 billion worth of goods in 2011. a lot of that from china. the basic issue is this. there are container royalty fees which supplement wages. the employers want the amount capped. the dock workers do not. this is such a big deal florida governor rick scott sent a three-page letter to the president late last week urging him to intervene, quote, the
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predicted effects of a strike on the state of florida would be devastating. it currently generated 550 direct and indirect jobs in florida and contributes approximately $66 billion in economic value to florida's economy. governor scott invoked the taft-hartley act that says the president can intervene with labor disputes that, quote, imperil the national health or safety, end quote. the u.s. mx said the stoppage in the west coast a decade ago cost the economy about $1 billion a day. reportedly the unions offered to extend the contract through january was rejected. if there's a strike, the union says clothing, frozen foods and household goods would not move. but mail, military cargo and some perishables may go through. the last time we had an east coast strike like this, 1977. i did call the union's main office this morning. they are closed for the holidays.
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and on their website, a little bit of foreboding, there's a big fat link on the upper right side that says strike preparations. melissa, back to you. >> brian, as we've seen with other strikes, of course, theoretically shifts can go into other ports maybe in mexico and goods can move up by rail or truck. >> yes. but it does complicate the supply chain. there is obviously some distribution issues. but yes, there are ways around it. it just complicates it and costly. >> brian shactman, thank you. as congressional leaders still struggle to reach a deal ahead of the fiscal cliff, let's look at how the municipal bond sector could be affected. chris, great to see you. >> great to see you. thank you. >> there are a lot of investors who are absolutely panicked over this. what is the best case scenario in terms of the tax-exempt status for municipal bonds? >> i think it's a virtual certainty you'll get some type of tax change from congress. the question is, what kind of changes are they going to make.
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that has the market concerned to the extreme. you've got to have some kind of certainty in terms of the tax regime in order to have a functioning, efficient marketplace. >> sure. go ahead. >> at the moment, the theory is that the most likely change is going to be the one that emanates from the president's 2013 budget document, which would place a 28% cap on deductions and exclusions, which would include, of course, municipal bonds, taxes and interest. >> and if you are a current holder of municipal bonds, will that apply, could that apply to the muni bonds already in your portfolio, or will those be exempt and only for the issues that are bought once the law gets changed? >> nobody knows for sure. that brings up a very important point, which is historically, the treasury department has never imposed taxes on anything retroactively. so this would be a very bad precedent if they decide to apply this to existing bonds
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that are currently outstanding. what they ought to do is apply this, if they're going to do it, on a foregoing basis, the bonds issued after january 1st, 2013, for example. >> we're showing the picture of the mub, the etf that tracks the municipal bond market. we've seen it decline since the beginning of roughly december. i think a lot of people are concerned about this. but your point is, that perhaps if you buy this year, the treasury would not put taxes on those holdings, correct? which could be a good time to buy muni bonds. >> you're playing a gamble on whether or not the treasury is going to protect you for this year or not. personally, i'm a little bit more worried about the fact that the taxes could apply retroactively. just because of the nature of the way this would work. what's appealing about this to the treasury department is this taxation becomes a line item on your 1040. if you earn a certain amount of
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deductions and exclusions, you'd be subject to this additional tax, if you're at the higher tax bracket, above 28%. so it's easy to administer this taxation of interest, and that makes me concerned that they're going to apply it both prospectively and retroactively. >> chris, i wonder in the end, are you more worried about the potential changes to the tax structure, to deductions, or the impact on muni budgets if in fact the grants, federal grants from washington either slow down or come to an end? >> well, this is a disaster for state and local units of government. the first order of effect is that the cost of infrastructure becomes much, much higher. costs of financing go up. the availability of investors declines. interest rates rise for municipal issuers. and so what happens to all that higher tax-exempt interest cost that issuers have to bear? it's ultimately borne by the taxpayer themselves.
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so really, this is just a transference of the taxes and subsidy back onto the shoulders of the regular property tax and income taxpayer at the local level. >> wow. a lot to keep track of. chris, thanks for giving us your thoughts this morning. >> thank yhankery much. gas prices at the lowest level we've seen in more than a year. what does 2013 hold for energy. find out after the break. [ male announcer ] how do you trade?
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it's been quite a year for the energy sector. sharon epperson has a look at what could be in sore for the industry in 2013. >> on the road to north american energy independence, the next
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decade is crucial. in the new year, the dramatic rise in sufficient oil production will continue its extraordinary climb. at the same time, u.s. petroleum supplies will have a greater reach. in the first quarter of 2013, more of the nation will have additional pipeline capacity. helping to alleviate the abundance of domestic supplies. and perhaps mitigate any meaningful price gains. after a year, full of fluctuations, by the end of 2013, oil prices may not stray far from where they started the year. it's no secret we have a lot of natural gas. enough to have flooded the market with more supply than the nation could possibly have consumed this year. but those days may be coming to an end. what will we do with all this natural gas? in the new year, the u.s. will find more ways to utilize or export this cheaper, cleaner fossil fuel, and the increase in demand will set the stage for the continuation of rising prices. >> let's head to chicago to get a bit more on energy.
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the senior commodities broth brother -- broker. how is oil dependent on fiscal cliff deal or no deal? >> well, i think that's the biggest short-term burden that crude oil and most of the commodities have right now. the biggest factor is if no deal is done by year end, the possibility of the u.s. slipping into a recession in the first half, greatly increases significantly. if that does that, you can see crude oil prices back off to that short-term support right around 86. i think overhead we're met with about a 91 resistance. the volume and also the participants in the market are going to be significantly less as a result of these fiscal cliff worries. >> we're going to sort of trend right around here -- it doesn't look like we're going to get a deal before year end of any great significance. that being said, we may get one last year. do we trade in line right here? >> so we're going to trade probably 91 on the upside, 86 on
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the low side. i think once a deal is done, you're going to see a reemergence of a risk-on rally. i think that's where crude oil breaks out to the upside. we start to get an upward trend. opec's 2013 target is around $100. i think we'll move up into the mid-90s and probably press through that $100. one of the burdens we have is we do have an abundance of supply in the u.s. the u.s. won't export any crude oil, but i think the possibility of us starting to consume more, would drive and help support those higher prices. >> when you put on those longs, i'm wondering, because this week is a holiday shortened week. congress is coming back on the 27th. is this a trade for 2013? >> yeah, it is more of a trade for 2013. i wiould start to look at fartherer out contracts, to like december 2013, and play the entire year's action, just by being long that one contract. but i would strongly wait until after the beginning of the year,
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because of the weaker volume, the lack of participants. and i think that the price is really going to shop around. >> nat gas prices taking a step back. what do you see in the immediate future and what is the main catalyst here? the weather seems to be sort of calm. >> yeah. that's the issue with natural gas right now. two parts, one, you've got the weather has been significant factor. it's been abnormally warmer. so that's putting pressure on the market. also, if you look at inventories from a year ago to today, they're about 2% higher. so i think that a 350 to 320 natural gas price is probably right right now. but ultimately, once i think the u.s. starts really strongly considering exporting liquid natural gas, and we start to see consumption expand into other areas, you're going to see natural gas prices start to trend up. but i don't think they'll get much higher than $4. >> phillip, thanks for your time. appreciate it. >> thank you. >> still ahead, the ipad has
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some stiff competition in the tablet market this year. but does the tech giant have a reason to worry? we'll tackle the holiday tablet wars straight ahead. much more "squawk on the street" after this break.
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♪ it's christmas time again decorations are hung by the fire ♪ >> let's hop over to chicago to the santelli exchange. >> what was that? >> quickly in position. >> good move. >> how did you like that? you said hop to chicago. i just wanted to be accommodating. you know, christmas eve. we all love christmas eve. especially those out there that have young kids. it's just an exciting day. and it's also an exciting day with regard to history. so i thought maybe it would be a good day to look at some of the christmas eves of the past so to speak. and one that just jumps out at me that was memorialized in the "new york times" on christmas
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eve just think partridge in a pear tree. i think it's pretty funny that was written by a gentleman whose last name was pear, robert pear. there is one particular line in the second paragraph i would like to show on the screen right now and i will read it. it says, it was the first time the senate had gathered for a vote on christmas eve since 1895. 1895. so if we talk about the christmas eve timelines, we have 1895 and then we jump ahead, 117 years, to three years ago today. christmas eve 2009. why is that important? because that is the second time the senate gathered and they passed obama care. they passed it along party lines, 60-39 vote. it wasn't until march that the house ultimately passed that over 2,000-page bill and the president signed it, but the reason i'm bringing all this up is simple.
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we've heard a lot of issues on the fiscal cliff the last several months and of course some of the best stories on the fiscal cliff have been right here on cnbc. we have the badges to prove it. but, hey. the senate, the house, the president, they all want to do what's best especially harry reid and his gang. they're so worried about everybody in the fiscal cliff. they're obviously worried about how a & p is going to affect people, marginal tax rates, the middle class. good. people need to be worried about the middle class but exactly how worried are they? where there is a will there is a way. there was a will in 1895, a will three years ago. yeah, 2009. but obviously there is a whole lot more talk than action because, let's see, i hear crickets or i hear some hula music but i certainly don't hear the ruffling of papers as any bill is getting passed. so i guess i will leave on this note on christmas eve. you know, i send my best wishes
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to all the military that are out of the country protecting us and making sure they secure the rights for every american, and i say to congress and the president, if you really were so concerned, you could have done a repeat performance. obviously obama care is signature legislation. cornhuskers, a lot of back room deals. but after 25 days of straight debating, they did pass it on christmas eve. i guess this bill just wasn't as important. carl, back to you. >> i'll take it, rick. thank you. rick santelli. coming up next why some people are wishing for a yellow christmas this year. and don't forget to tweet us. the financial times says toy makers are trembling as tots turn to tablets instead of traditional toys this holiday season. kids who don't want toys? as tots trade toys for tablets we wonder what is up with kids these days. tweet us and let us know what you think at squawk street. we have some of those answers
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right after this. ♪ why can't they be like we were perfect in every way ♪
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hunger and diabetes.anage
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most people are dreaming a white christmas but some are dreaming of a yellow christmas, the kind that comes in a little blue box. robert craig explains in today's million dollar minute. >> reporter: this holiday season some of the biggest gifts come in the smallest packages. yellow diamonds are among the rarest, which is why this 15 carat rock rings in at $3.8 million. >> the cut is truly spectacular, 82 diamonds, a combination of round, brilliant cut. >> reporter: $2 million worth of yellow rock. >> that is oval cut yellow diamonds. the rarity is incredible. >> reporter: total cost? $1.2 million. >> say we have three friends going out for a night, one wearing the diamond necklace and ring, another one wearing these two. what would the total value of the pieces be? >> that would be $14 million. >> reporter: what kinds of
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people are buying these big pieces? >> a woman whose husband or boyfriend loves them very much or a woman who wants to treat herself for a major life accomplishment. >> reporter: if yellow bling is not her thing, there is always white. but at $7 million bucks you better be sure. for cnbc. >> are those comfortable, melissa? i mean, if you -- >> you're asking as if i had experience wearing yellow diamonds. >> if you have that much money if your neck muscles have to be stronger to support the weight of the rocks. >> i think they are just as comfortable as white diamonds is my guess. >> certainly a lot of money. >> $14 million? >> treat yourself. >> i've earned it, right? >> yes. you've earned it. if you haven't seen it the ft today is reporting this morning toy makers are apparently scared as tots turn to tablets over the holiday season. it brings us to our squawk on the tweet question as tots trade toys for tablets this season what is up with kids these days?
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babysitters are flying off the shelves this season. ipads are multi function. toys have no chance. >> kids are a lot smarter these days. they know with the tablet they can shop for their own toys 24 hours a day from anywhere. >> very dangerous. >> if you have the credit card number you can be very dangerous. >> it's true. >> no fast money tonight. i'm still astounded j.c. penney is up 4%. obviously a light volume day but apparently off this one oppenheimer report. >> it backed off the highs of the session and now is 3%. it is interesting to hear the whole thing was based on two store visits. we respect nagle but at the same time that is fewer sources than we'd use when we go to air a story. >> given his thesis is the turn-around they had, they may be winning but not for reasons they originally envisioned. have a great holiday. >> you too. see you on wednesday. >> see you later in the week. if you just missed this
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morning's action here is what you missed. >> welcome to hour three of "squawk on the street." here's what's happening so far. >> i truly believe the good news is this is setting ourselves up for true entitlement and tax reform in 2013. >> people had a lot on their minds this season. this weekend was a key weekend. i think it helped. i didn't see promotions being extra promotional but it's a push till the end. >> today will be light volume, right? >> yes. >> shortened session but light volume. who knows what that could lead to. of course it is a classic day if you wanted to bury some bad news christmas eve is almost the perfect day to do it. >> i did earlier see two shoppers. okay. no. that guy is stocking merchandise. that's not a -- no. that's not a customer. >> what's the market reaction to a slimmed down view? >> i think you would get a rally because you would escape that near certitude of the recession. it would give you enough wiggle room in there to look around.
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i don't know how celebratory it would be but i think a sigh of relief rally. >> all we're doing really is going past december 31st and have to do something in the first couple weeks of january i don't think it rips apart the opportunity for next year. there are a number of good things going on, too. >> this concludes our countdown to christmas for 2012. we're hoping santa is good to you this year. ♪ santa baby just slip a sable under the tree for me ♪ ♪ been an awful good girl santa baby ♪ >> happy holidays. merry christmas. live here at post 9 of the new york stock exchange. get a check of the markets during the shortened session the markets closing at 1:00 p.m. eastern time today. the dow is down 43 points, s&p off 4, nasdaq off 11 j.c. penney one of the biggest gainers after comments from oppenheimer's
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saying the aggressive promotions are showing evidence of success. the firm noted while the promotions deviate from the original strategy it is a hybrid approach that will actually improve cash generation. groupon meantime slipping up after the company says it is acquiring commerce interface which helps firm oversee their businesses and selling online. to the road map this morning with congress and the president away on christmas break it looks like a deal on the fiscal cliff will have to wait but is there even a deal in sight? we'll head to washington to find out. then it's a procrastinator's paradise at malls across the country today. retailers hoping to make big bucks on last-minute sales. find out who is set to come out to know please. plus, tablet seems to be the word for christmas for everyone from toddlers to adults. does apple have a reason to worry with competing products coming from microsoft, amazon, and even barnes & noble? we'll get the latest on the holiday tablet wars. he started i-ads at apple. now he is revolutioning the world of mobile advertising all over again. we'll find out how the ceo of
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session m plans to mobilize mobile apps. still no sign of a deal on the fiscal cliff. how should investors position themselves? hank smith is chief investment officer and joins us this morning from philadelphia. good morning to you. >> good morning carl. >> tough weekend if you were counting on a deal coming in under the radar despite all the back and forth in the public press. are we all set now to do a big rethink on whether this is going to happen? >> well, i think it's amazing how well the market has held up. a month ago if you had said we'd come down this point you would have thought the market would be a thousand points lower. i think what's going to happen now is we are going to go over the cliff very shortly and then we'll probably be offered the biggest tax decrease after we had the biggest tax increase and then 30 days later we'll be talking about the debt ceiling and that's where the spending aspect of this comes in. >> yeah. so where is -- if you were going
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to try to time it and load up on some equity at the low point near term where do you think that would be? >> well, carl, i think it's a very tricky avenue to try and time so we would say if you're invested, stay invested. if you have cash on the sidelines and we know there is a lot of cash on thesidelines, use any type of correction or pullback as an opportunity to buy because this is not about fundamentals. this is strictly about politics and political ineptitude and we think it will be very passing and not have long-term implications. >> yeah. you seem to be giving the lawmakers a fair amount of credit to get this done somehow, whether it's in a year end framework or a debt ceiling limit framework. isn't there room if they disappoint you and we are set for what some call a near certain recession in the first half of next year? >> well, i think the real disappointment would be if we go over the cliff and then they do
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not correct that. there is no resolution. and we go throughout the entire year with the tax rates and the spending sequestration and then you most certainly have a recession. but if we go over the cliff and then it is quickly dealt with, i think the impact is rather muted. there will be some fiscal drag for sure. but i don't think we'll see a recession. >> all right. hank, thank you so much for that. happy holidays to you. thanks for being with us. >> yes. merry christmas. >> thank you. bob pisani is on the floor with a group of floor traders for what is a time honored tradition down here at the exchange. >> that's right. the singing of barber shop quartets is one of the oldest of the new york stock exchange and the grandest of the barber shop quartet songs is wait till the sun shines nelly. it was composed in 1905 but really didn't become popular singing on the floor until the mid 1930s. here due to the festivities and baton twirling a dear old friend of ours from many years, warren
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buffet specialist. jimmy, take it away. ♪ wait till the sun shines, nelly and the clouds go drifting by ♪ ♪ we will be happy nellie by and by ♪ ♪ sweethearts you and i wait till the sun shines nellie by and by ♪ >> and the floor may be a little bit thinner than it has been in many years but the bottom line is everybody on the floor still shows up to sing that song and a number of the old-timers including jimmy mcguire. thank you very much for showing up. really appreciate it. some traditions at least don't die.
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carl, back to you. >> wish we could do that a couple more times, bob. thank you so much. bob pisani. on a much different note the president and congress taking a christmas break amid the recent fiscal cliff negotiations, leaving a little less than a week to get a deal done. our hampton pearson is in washington with the latest on that. good morning. >> amaidsingly single digits to even get a short-term fiscal deal done. president obama with what we might call a bare bones plan c proposal, extension of the bush cuts for those making less than $250,000 and extension of long-term unemployment benefits but leading senate republicans are skeptical of the desire of the president and democrats to avoid going over the fiscal cliff. >> when i listen to the president i think the president is eager to go over the cliff for political purposes. i think he sees a political victory at the bottom of the cliff. he gets all this additional tax revenue for new programs. he gets to cut the military, which democrats have been calling for for years.
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and he gets to blame republicans for it. >> and most republicans now looking even past january 1st and seeing the coming fight over raising the debt ceiling after the inauguration as their best chance of pushing president obama and democrats for more budget cuts. >> the big chance for a big deal is that the debt ceiling -- that is when we'll have leverage to turn the country around, prevent it from becoming greece and save social security and medicare. >> as a practical matter no matter what congress and the white house do before the end of the year it is already too late for most employers to accurately withhold taxes from the january pay checks unless there is no change so workers will feel immediately for example that 2% hike in social security taxes in those first january pay checks. carl? >> i hate to work in an accounts payable department over the next couple weeks, hampton. it is going to be kind of nutty. thanks so much. hampton pearson in washington. procrastinators across the country are hitting the malls
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today to take advantage of the last-minute sales. find out which retailers are going to benefit the most. but first, rick santelli is working on something for a little later on. rick? >> and probably about a dozen minutes of course we'll come back and have a guest and who would be the perfect guest on a christmas eve where there is so much going on in the world of finance, politics, of course you must have guessed it. ira harris will be here in about ten to 12 minutes. i know he is one of carl's favorites. i bet he's one of yours, too. see you in ten. #
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. it is the very last day for holiday shoppers to hit the stores. the question is will the final push in spending from those procrastinators lead to a merrier month for retailers? jane wells is live at the galleria in glendale, california. good morning, jane. >> hi, carl. the mall has been open for an hour now. oh, well. you know. a little light traffic. we're seeing a few macy's bags. let me tell you about macy's. macy's has been open all night and i want to show you a picture we took inside as the mall opened at 7:00 they started changing out or removing some of their sale signs. for example we snapped this photo of a 25% to 50% aisle
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which had a second sign with it that is being moved. the second sign said an extra 40% off. that extra 40% off came down. that sign came down as the mall opened leaving only 25 to 50% off. really only 25. but what about the economy? bank rate says one in three consumers tell it the fiscal cliff is making them hold back on spending and budgets are on everyone's mind. >> definitely shopping on a budget because i just wrote a book and i had to spend a lot of money to get the book printed so i have to be very careful. >> we're always on a budget but we always exceed it. >> my budget this year is lower than last year but it's going okay. i am still able to get people little gifts here and there. >> we're spending a lot of money this year. we're buying everybody gifts this year. just because, i guess, it's almost the end of the world. >> well, it's not the end of the world. she still has to pay her credit card bills.
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costco and nordstrom, he said this weekend it looks like it was a little tepid and it is very tough to gauge how online sales have been. >> everybody is up extremely strongly online but at the same time i think a lot of the retailers gave such good discounts and for so long so early that i think they pulled some selling out of the back end of the season. nounchts, yesterday was the last day for thousands of temporary amazon workers like these we visited outside reno a couple weeks ago. so, you know, the amazon big push in working and delivering, that is now over. "consumer reports" predicts, though, 17 million americans will shop today but it is saying as of the weekend, carl, the median spending was $340 a person. that is less than half the total holiday spending the national retail federation was predicting for this year, which means today is really important and not just today but of course wednesday
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for the after christmas sale. back to you. >> yeah. and we just heard that a few moments ago, that i guess the day after christmas, jane, is one of the top five selling days of the year given all those gift cards that have to get used. we'll see what happens, jane. >> you bet. >> jane wells in glendale. i want to get a market flash here back at hq this morning. >> we're watching shares of facebook up better than 2% on the back of an upgrade of needham, raising the price target to $33. it was previously $25 citing the potential for revenue growth in mobile. that is obviously key for facebook. a positive article in "the wall street journal" saying start-ups that have gone public like facebook, groupon, and zynga are at a low cycle and the potential for upside here is big. >> apple may need to make big changes next year if it wants to keep up with its competitors. find out what those changes are when we're back after a short break. [ male announcer ] it's that time of year again. time for citi price rewind.
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it has been quite a year for the tech sector, apple stock hitting it, microsoft unveiling windows 8 and the drama at hp over its acquisition. we have more on what to expect for the sector in 2013. >> reporter: in 2013 expect some changes for apple. of course, they sell the iphone 5 and the 4 and 4s for a little cheaper but expect them to come out with an even cheaper iphone for emerging markets. if they don't they'll risk losing market share to android. apple is not the only one who will face a potential strategy shift. expect samsung to go further than ever before to put its own spin on android. the new fire power in silicon valley, samsung will layer unique media and apps on top of
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google standard operating system. then there is the issue of traditional computers. expect the decline of the pc to accelerate in 2013 ascent prices don't buy windows 8 just yet and do snap up other tablets. the windows ecosystem led by microsoft will have a shot at stemming the tablet tide with touch screen pcs but the truly affordable pc at 500 bucks and under won't arrive until the end of the year. finally, 2013 will be a year of shake outs with hp, nokia, and r.i.m. each taking its last stand. expect at least two of them will be forced to start retooling their business models to stay in the game. that means hps parent business will have to hold up. blackberry 10 will have to be a hit, and lumia will have to shine or else. >> and from tech to santelli let's get the santelli exchange on this christmas eve trading session. rick santelli is in chicago. >> hi, carl.
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you know, i was just talking to ira off camera. i wish all of you in tv land or satellite radio land could be the third party here because we have some interesting conversations. all right. ira, here we go. you know, monty hall, a big game show guy. now we have mario monty hall in the game of politics. can you try to explain to viewers and listeners? you know, no, i don't want to lose but i'd still take the job. tell me about it. >> he wants to be -- he wants to run the show and, you know what? when you saw berlusconi kind of backed off and actually support him now so it's like they're going to parachute him back in. he won't run and he says i don't have to because he is a life senator whatever that means but italy has its own laws as you know, probably as well as anybody. but he wants -- he'd like to continue to run the show because he feels just like mario draghi that he's been very successful and he can't let go of the reins. now i understand that. but he doesn't want to run. >> he's been very successful and he tells us about that.
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>> right. >> he had his july 26th surprise between him and mario draghi but in the end as you pointed out off camera he doesn't want to lose. he's not going through the process in a way where he can lose. basically if you appoint me i'll take it. >> right. >> i think president obama or any politician in the u.s. would love to have those terms up. >> right. he wants the terms. no election. i don't want that process. i don't want the feeling of rejection but i'd like to continue in this path. italy has to make a decision and i think the big money will line up behind him. we see the reactions when berlusconi was on the rise for those two days the bond market got trashed again in italy and he's been out there talking this morning anyway. >> switching gears to another country that has had a boatload of governments in the last six years let's look at japan, boy, there's a lot of wild things going on over there. >> you know what we saw last night or over the weekend.
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when the prime minister this week, well, he basically put the gun to the head of the boj and said i want a 2% inflation target. right now they have a 1% inflation target. he wants to double it and basically create as much money as they need to get to that level. just like the fed. is it 2? is it 2 1/2? 3? the bank of england has a 2% target, too. but they've been over that for years and there's always an excuse. but as we know, and as mervin keen the head of the bank of england warned earlier this month, 2013 is going to be the year of potential currency battles all over. and the japanese have fired a big shot here because as we were looking at it, if you look at the euro -- put it the other way. the yen has depreciated over the last two months, almost 18% against the euro. that is going to become a big story because -- >> let me interrupt you. here's why it's a big story. what was one of the most successful year over year appreciations of any developed country's equity markets?
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>> germany. >> bingo. i think of their own currency it's up like 30%. let's keep going. >> okay. so germany has been the engine of european growth. if germany slows down, the dynamic in europe is going to change dramatically. if this euro/yen goes through let's say 120, 125, 130 which is what they're pushing for, the german auto sector which has made great inroads against the japanese because the euro/yen as the japanese have held the yen has been over valued that is going to change the whole european dynamic. a slowing germany will become a wild card. that's my call for the biggest wild card in 2013. >> i tell you what. you have to go nose to nose with a country on the foreign exchange front, i think the japanese are going to be well matched with the mentality of what is going on in germany. listen, merry christmas. i know hannukah is over and you had a great hannukah. >> thank you. >> best holiday wishes to all the viewership from two old time
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traders. back to you. >> two of the best that is. rick and ira, thanks so much. happy holidays to you. facebook in the headlines again this time for tax trouble. we'll have more on that story when we come right back.
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the christmas holidays starting not long from now, markets an hour and a half away from closing on this holiday shortened trading session. for the time being the dow is down about 49 points, s&p off almost five and the nasdaq off almost 11. many global markets experiencing shortened sessions today around the world as well. london closed at 12:30 p.m. local time. france at 1:00 p.m. local. germany, italy, switzerland all closed for the day. markets in asia seeing some fairly calm preholiday sessions. here is a look at the hang seng and the nikkei as they performed overnight. or not. there they are at the bottom. all right. meantime former italian prime minister silvio berlusconi is sitting down with cnbc italy over the weekend saying he does not want to run for prime minister but is obligated to. our chief international correspondent joins us with more. we need a lesson on italian politics. what's going on? >> well, silvio berlusconi the former prime minister of italy so colorful with his convictions for fraud, sentenced to time in jail but nobody thinks he will.
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he is going to marry his 27-year-old girlfriend though he is not fully divorced. he is 72. here is sitting down with cnbc italy. yes, we do have a cnbc italy, quite powerful in italy. and he says, oh, he did not want to run for prime minister again but people have been twisting his arm because when he looked at the data, carl, he is the only one who can bring 40% of the vote. the vote is going to be in late february. mario monti just stepped down, the prime minister for the last year or so, passed a budget, said once i pass a budget i'm going to step down. this is monti we're talking about. over the weekend monti put up a plan on the internet and he said, okay. here is my economic plan. if there is a party in this plan i will be the leader of is that party and i, too, will run for prime minister. so this could be very interesting. silvio berlusconi had nothing good to say about mario monti during his interview and said every single economic indicator
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is lower since monti took over. they have been imposing us an tert measures. he said the markets were happy when monti stepped down and went on to say that the reason berlusconi had to step down in 2011, you remember that crazy time, carl, when the italian interest rates were skyrocketing, we thought it was the market rejecting italian debt because they were worried about the ability to pay it back. berlusconi said no. that was all deutsch bank's fault. at the same time the equivalent of almost a coup detate he said. it was a big lie. that's the reason why italian interest rates rose and he had to step down for wrong reasons. >> yes. >> they must be giving a way of escape for christmas in italy. >> oh, yes, yes. it never ends over there. >> thanks, michelle. happy holidays to you. we'll take a look at what is moving on this shortened day.
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>> going to ring the closing bell, we'll chat with him about the music business. the big debate is, is there a plan c for the whole fiscal cliff issue? never mind the pundits and the jokes. plan c doesn't stand for canada. the brief outline, the choices are getting narrow and not that hard to figure out. put up what that plan c looks like. the one on the table is still the old plan a. president obama's offer to raise taxes on the top 2%, restore the bush era tax cuts for the rest of us. yes there is talk about putting in spending cuts, raising medicare eligibility and changing the inflation measure for social security but that is still the one on the table. then there is the alternatives. the house passing that existing senate bill that's out there that would raise taxes on the top 2%. that doesn't include sequestration though. sequestration could happen so they have to either let it happen or insert some kind of stop-gap in there. the other one of course is just literally to extend everything
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for another month. extend all the cuts to the end of january and simply delay sequestration and of course that is the least desirable but that may be in fact the one that happens right now. let's move on and show you the market is still not very worried about it. the five-month high on an intraday basis on friday but still staying within that trading range that has been in for a while now. not really busting out above 20. if we stayed out above 20 then you could have people saying at least the vix is busting out. it's not right now. elsewhere if you look at the safe haven place we saw elevated on friday, gold not doing much. this is the long-term etf for bonds, not doing much either. and the dollar index a little bit on the upside. i wouldn't say any of these are particularly, statistically significant, these percentage changes. they don't really tell us that much about what the market is thinking right now. one of the groups that's up today are the retailers. we did see some positive comments on j.c. penney from oppenheimer though the data seemed a little thin there in my opinion. tjx up a bit. nordstrom. a lot of people have been arguing that retailers popped
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out in the middle of december. not bad numbers today. actually retail sales wouldn't be that bad this quarter and the main reason, there are several of them, the main reason is put them up here. home prices are up depending on what part of country you're in, 5%, 6%, 8%, compared to the same time last year. that is the biggest signal of consumer sentiment. gas prices are way down. we don't mention it. when they're up we do. i think that is important. the s&p is up 13% so far this year. all of these are positives. you have to weigh this against the reality of what we're seeing here. number one, the cons. fiscal cliff, hurricane sandy of course, that tragedy in newtown, connecticut, and, of course, all of this is weighing on this a little bit more than those slightly more intangible factors of home prices being on the upside. so i saw a lot of sales. i was out all day saturday and sunday in philadelphia, walnut street. i saw sales in ann taylor, express. most of the boutique stores that were out there, at least portions of the store were on
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sale. so to me that at least indicates the margins are going to be under a little bit of pressure certainly by the end of the year. >> we'll see what the new quarter brings. we'll see you in a few minutes. that was fantastic. >> got to keep up the traditions down there. >> absolutely. meanwhile, facebook shares on our radar. a tax story, bullish, endless note. >> hi, carl. according to the sunday times facebook reportedly funneled 440 million pounds or approximately 712 million dollars into a tax haven last year to avoid taxes in britain. now a facebook spokesperson in response says that facebook complies with all relevant corporate regulations including those related to filing company reports and taxation. but what really seems to be moving the stock today is a bullish note from needham that kala mentioned earlier the firm raising its forecast citing the potential for strong mobile revenue growth. one quote that stood out the analyst writing that they're confident each time facebook discovers a new successful
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monetization format facebook can roll it out almost immediately and at a low cost. take a look at shares of facebook in comparison to its social media peers. it is out performing the pack up better than 2%. back over to you. >> thank you so much for that. the tablet wars are raging on this holiday season and we're taking a look at who could be the big winner. will apple dominate or will microsoft's surface surprise everyone? oh, hey mike. what are you up to? oh, just diagramming this accident with my state farm pocket agent app. you can also get a quote and pay your premium with this thing. i thought state farm didn't have all those apps? where did you hear that? the internet. and you believed it? yeah. they can't put anything on the internet that isn't true. where did you hear that? [ both ] the internet. oh look. here comes my date. i met him on the internet. he's a french model. uh, bonjour. [ male announcer ] state farm. more mobile than ever. get to a better state.
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a body at rest tends to stay at rest... while a body in motion tends to stay in motion. staying active can actually ease arthritis symptoms. but if you have arthritis, staying active can be difficult. prescription celebrex can help relieve arthritis pain so your body can stay in motion. because just one 200mg celebrex a day can provide 24 hour relief for many with arthritis pain and inflammation. plus, in clinical studies, celebrex is proven to improve daily physical function so moving is easier. celebrex can be taken with or without food. and it's not a narcotic. you and your doctor should balance the benefits with the risks. all prescription nsaids, like celebrex, ibuprofen, naproxen, and meloxicam have the same cardiovascular warning. they all may increase the chance of heart attack or stroke, which can lead to death. this chance increases if you have heart disease or risk factors such as high blood pressure or when nsaids are taken for long periods. nsaids, including celebrex, increase the chance of serious skin or allergic reactions or stomach and intestine problems,
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a quick update on shares of microsoft. >> microsoft is trailing the market today down about a percent and a half the second worst performer on the dow on the back of a report from all things d pointing to an internal memo from december 14 that saw one of microsoft's key executives cede his post and now he is a senior adviser to the ceo and will retire in 2014. this is seen as internally at microsoft a point of weakness. yet another executive ceding that role. eric rudder according to this report is slated to take on the strategy position. >> we should emphasize
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reportedly a 2014 story but certainly interesting to note. thanks so much. tablets and smart phones by the way some of the hottest holiday gifts this year and between apple, amazon, r.i.m., and microsoft there is a lot to choose from. who is coming out on top? dennis burrman is market place editor columnist of "the wall street journal" and joins me. good to see you. >> good to see you. >> this debate seems like it shouldn't be that hard. apple and microsoft. you've gone so far as to call the surface irrelevant. if you look at the overall market share for tablets, the product just launched a few weeks ago. i can't imagine we'll see more than a few single percentage points in market share by the end of 2013. right now the tablet market place is still almost predominantly apple. the phone market place is very different but the tablets will probably stay apple predominantly through next year. >> what is it about microsoft and hardware? why, i mean, can they, are they simply incapable of launching
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something you hold in your hand? >> of course this is the first time they've really launched their own designed hardware product. the reviews are respectable. >> sure. >> of course respectable only takes you so far in this market place. respectable but irrelevant. maybe there is a football or baseball team analogy but right now microsoft is not a player in that arena and the markets know it. >> you mentioned phone share. that is a different story at least whether it's between apple and some other big rival, samsung. >> this, i think, if you're thinking about 2013 this is such an interesting theme which is how much can apple hold its market share? after the iphone 5 the market share went up in the u.s. but across the rest of the world and remember the majority of smart phones are now sold outside the united states, carl, in the rest of the world android is continuing to gain market share. and this is the real tension here. can apple either change the price point or product point to get more market share, in fact
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change its products? but right now it is android doing better outside of the u.s. >> speaking of google, you think one of the biggest wild cards for the new year may be motorola, google, than product? >> there is a second thing to look at. it is tensions within android. however well android is doing there are tensions between those companies that make the products that run android and of course google is the progenitor of the android operating system but samsung now the largest seller of android devices. in 2013 we'll see a real clash inside the android ecosystem. we're seeing on friday the general report about motorola shall the google unit trying to develop its own smart phone to compete against samsung, the x phone, whatever that means. i love that name. but that's the real tension. and that's going to be a really interesting thing for 2013 and into 2014. >> you know, it seems like for most of the year we talked about apple tv knowing that it was likely not a 2012 story. i can only imagine how much we'll talk about it in a couple weeks. >> don't you think next year is
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the year it happens? >> if it doesn't, then i think the company has got a real expectations problem. >> right. well, right now $700 stock to basically $520 stock. i can't think at this point that they won't do it. they kind of have to do it. like in terms of the apple story, the story has in some ways run its course and they need to pick up a new chapter. i'll bet you we'll be here maybe a year from now, i bet you apple tv will have been introduced and people will be buying it for christmas. >> i'm not sure i would take the other side of that. cook has alternatively said it is a hobby and then said they're working on something very exciting in his last interview with brian williams. >> yes. >> we'll have to see what the truth is. >> like any good sports manager he is lowering expectations. >> if only the jets could do that. dennis, great seeing you. >> good to see you. >> happy holidays of course. we'll see you in a little while. >> a pleasure. >> straight ahead we talk to the former apple employee who
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invented i--ad looking to revolutionize the world of mobile advertising once again. he'll tell us how after the he'll tell us how after the break.
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tens of millions of people are using smart phones.
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there are over a million and a half apps in existence. with so many options to choose from, it can be hard from one app to hold a mobile consumer's attention. this is where session m comes in. brought to i by the entrepreneur that developed apple's i-ads session m is driving user engagement with mobile ad technology integrated into apps that offer a loyalty and rewards program. session m. it's transforming the ad experience by creating a new context for mobile ads. >> warners albright is the cofounder and ceo of session m and joins us from newton, massachusetts. lars, good morning to you. >> thanks for having me. interesting story. you're at apple and leave because you essentially see a problem in mobile engagement whether it's engagement or retention but somewhere in mobile you saw something lacking. what exactly was it and how does session m help? >> what we'd seen over and over again is a lot of downloads which is great but when you
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looked at the active user numbers, people that come back day in and day out, those were really challenged. so what we saw is an opportunity to really try to drive an active user for both publishers and advertisers and that becomes the core of how you can make money and use that as a way to actually have a sustained user that is going to come back and interact with your content. >> right. that turn can be so painful. once they're gone there is a good chance they're gone for good. you call yourselves a layer that sort of lies above all hundreds of other apps. essentially how does it work? >> we sit across hundreds of apps and a across all different categories so it can be weather, sports, gaming. what we do is we let the publishers set engagement mile stones where users can say come back every day, share with friends, post on twitter or facebook and then get rewarded with a currency called m points. those points can be used for all sorts of great things like gift cards, sweep stakes, along that
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path we let sponsors and brands be part of those moments in the application. we really help drive that habitual behavior where people are excited to come back to an application. we know they respond very well to rewards and loyalty programs and it's a lot like if you think of say your favorite credit card when you use it and you go get rewarded for purchasing things we're doing that across the network of mobile applications. >> all right. how much has this holiday season been sort of a laboratory where you're able to determine the effectiveness of some of these new tools to keep shoppers engaged? >> sure. we see a lot of growth in the holiday season. we're seeing -- we actually ran a survey across our network, 5,000 respondents, and over 3/4 of them told us this year they planned to use a mobile device for their shopping. so really impressive number and close to half said they were going to be motivated by mobile coupons or rewards of some sort. so you continue to see this broadening out of the mobile device and using it for things like mobile commerce and shopping. >> yeah.
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people say if the effectiveness of mobile advertising, where is it in terms of versus the optimum, you say it is not even close. what's wrong with it? >> so part of what's wrong with it, we have made progress. we really developed a long way from the early days of it back when we were starting up quatro 6 and helped develop advertising to where we are today but really we still have a long way to go in terms of making it a positive experience for consumers. there is still a perception from consumers that banner ads are frustrating and irritating. there is a stat out there up to 88% of people find mobile banners to be a frustrating or irritating experience. so what we want to do is think of ads as a rewarding and fun and invitational experience and that's what we're doing in session m, giving them away to opt in to a rich media ad experience. they get rewarded for it and recognized for their time and commitment into the ad. then they can go in and redeem for things they want. we see incredible rates of interaction and recall and performance on the ads that we're using. >> it's, i mean, as it is right
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now it often is something you just want to find the way, find the x box to make it go away as quickly as possible. finally, you're not fund raising. you've raised a significant amount of money early on from highland and kleiner. what's that like not to have to worry about that or will you have to worry about it sometime soon? >> right now we're just focused on growth. we have 60 employees across the country. we're looking at new initiatives in 2013 like expanding internationally, adding tablet support, and doing some things on the product side. right now we're not focused on capital. we're focused on growing and it is a nice position to be in. >> yeah. some people i'm sure envious of that. lars, thanks so much for your time. happy holidays to you. >> thank you very much. >> lars albright of session m. up next, a five-time grammy nominee will join us here at post 9. keep those tweets coming. the ft says the toy makers are nervous as tots turn to tablets instead of traditional toys this holiday season. kids who don't want toys. what is up with that? we're asking as tots trade toys for tablets what is up with kids these days?
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tweet us at squawk st and we'll read some of your answers after this break. ♪ kids they still do just what they want to do ♪ [ male announcer ] truth is, nyquil doesn't unstuff your nose. what?
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chris bodie is a renowned jazz trumpeter the biggest selling instrumental artist in the united states, 3 million albums sold. he is at the nyse today to ring the closing bell and talk to me and bob pisani about the music business. good morning. >> good morning. the amazing thing is the hardest working man in show business is a cliche' but if there is one this guy has to be it. 300 days a year. >> for nine years. >> on the road. why? is this what it takes to be in charge of the music business these days? >> i think that if you take the music business for an artist and you equate it to any of the people that show up in your show like a ceo of a company that you have to find your fan base and figure out a way to make music for them in my case and stay with them. i mean, the litany of artists is long. the road is long of people that have a hit and then they think, well i'm going to take some time
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off and their fan base goes away. i feel very lucky what's happened to me and i want to go out and make sure all throughout the world we tour as much as we can to get up on the stage and play for people. >> you sold 3 million albums. four number one jazz albums. what is the music business like these days? is that what it takes, 300 days a year to stay on top? >> i think the new music business is the stage. i'm an artist that's had a lot of success without a really a hit song. i don't have an mtv hit or something like that. my thing is sort of grass roots going and playing show to show and word of mouth, building that thing into a worldwide kind of touring figure. and i think that that's the new model of the record business of an artist that has staying power. that's the key. you can be an overnight success and overnight bust as well but to actually have a long approach to finding a fan base and keeping them, you need to be able to do it live. that is the important thing. >> what is amazing about this guy is his interest extends beyond just the music business to business in general. we met four or five years ago.
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he rang the opening bell and came over and said hello to me. i said i know who you are. why do you know who i am? this guy is a huge cnbc fan. you go all over the world. you watch cnbc. >> yeah. first thing in the morning whatever hotel we're in, roll over and turn it up. turn on the tv and watch cnbc and see what's on. listen, you'd be surprised how many musicians are fans of the show. there are a lot of great things you can learn even if you're not trading a lot. you can keep up to date on current stuff and the people that are very inspirational that come on the show that have these companies in the -- you know, lots of people they're employing and doing things and their passion comes across the screen and i love it. i think it's fantastic. >> you know how much we talk about social media. you talk about audience engagement. twitter, facebook, another platform? what works for you? >> i've never been on twitter and i've never been on facebook and the reason why is i'm sort of more old school. i think i want kids to be more enamored with playing the cello or playing the piano. and for me, i just play my
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trumpet and i go from city to city and i try to get everything i can to my audience. when i go home and want to tweet something i might have something clever to say for one day but i don't know. the next day, what do i say? i don't know. starbucks, having a coffee. >> besides twitter what about something like spotify? i have the premium service and i love it but at the same time it is appalling to me because i'm worried about whether artists are getting paid enough for that kind of music. are they and what do we do about it? >> i think for the consumer it's great. obviously they get so many choices to decide what they want. but they can get these days whatever exposure you can get to have an artist go, have a fan say i like that person and come see their show is fantastic. i'm fortunate enough to be with a fantastic record company, columbia records that puts me in all of the right places. for a young artist coming up, all the little things you can do, facebook, twitter lead to having a fan. >> hardly a young artist coming up. what do you do when barbara streisand callson says i want you on tour with me.
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this guy was on tour with barbara streisand. >> that was a big thrill. you know, we've run into each other. i played at the white house last year. and miss streisand was there. we talked about doing something. in show business it's kind of like let's have lunch and you never do it and she, it happened. you know, she called up and said i want you to come and be my featured guest on my tour. we did 12 cities. the shocking thing is that since 1963 she's done a total of 90 gigs. 90. >> almost 50 years. >> two a year roughly. right? and we did 12 together. it was fantastic. so much fun. and her instrument is just marvelous as it always was and her phrasing is like incredible. >> what kind of legends do you still want to play with that are still out there? your new album now out. >> we had good ones on there. >> andrea bocelli, david foster, herbie hancock. my very first gig ever professionally was with frank sinatra and a long stint obviously with people like sting and jonie mitchell and paul